What is Value? It Depends on Who You Ask
By: Dean Summerfield, DPhil | February 25, 2014
Ten years ago, if a drug delivered efficacy to the patient who was taking it, it had value. But in the past couple of years, defining value for a healthcare treatment has become far more complex, with different stakeholders disagreeing over what value means and how it should be measured.
Determining the value of any product, in any industry, is always a balancing act. With every purchase we’re looking for that tradeoff between quality and cost, and that’s true in healthcare as well. When governments, payers, provider systems, and individual patients look at healthcare, they are trying to ascertain whether the treatment delivers the balance of value and cost they desire.
The problem is that the balance changes depending on who’s making the tradeoff.
In a recent Quintiles survey, we asked stakeholders to rank different criteria relating to value, and in doing so, we discovered some surprising disparities. Most heartening was the fact that improved clinical efficacy was important to them all. But after that, their interests diverged.
Providers focus most strongly on quality of life, for example, while Biopharma executives place ‘addressing unmet medical need’ and ‘the comparative efficacy of related products’ as their next most important factors.
And interestingly, even though economic factors are the driving topic of conversations related to value and healthcare, cost was rarely selected as a defining factor of value. None of the stakeholders ranked ‘cost compared with existing products’ high on their list, and nearly one-fourth of biopharma executives placed it at the bottom.
However, there are some signs that attitudes are shifting. Many EU payers and providers put cost in their top three, and US payers always include it in their top five, suggesting that cost and competitive pricing is gaining attention among these stakeholders groups.
The implication for biopharma is that if they fail to measure cost in relation to quality as part of their future research and communication strategies, it will impact their long-term business potential. Historically, any safe and effective treatment option could achieve commercial success. But today, failing to prioritize cost as a characteristic of value could derail the commercial viability of a high-quality but over-priced product.
You can learn more about Quintiles research into the value proposition by downloading Value is the Target.